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Post by cheeryble on May 25, 2015 10:44:48 GMT 7
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Post by Fletchsmile on May 25, 2015 14:31:34 GMT 7
Cheers for that Cheeryble. Some interesting investment trusts on there. Investments trusts seem to have become less fashionable over the years, as unit trusts and ETFs have become more fashionable. In addition to being able to borrow and leverage, their "close ended" structure, compared to "open-ended" for ETFs and unit trusts, investment trusts can have some useful advantages. They're useful for less liquid underlying investments like property portfolios. With a unit heavy massive redemptions can destroy the fund as properties can't easily be liquidated, so closed ended is better, and I like them for this. Another area investment trusts are useful is they often trade at discounts. If you're looking to buy and hold for the dividend yield you can often end up with say 100 of assets for a price of 95 (discount of 5% of price compared to net asset value - NAV). This boost the yield, as instead of getting say 4% 4 dividend on 100, you get the same 4 dividend on a cost of 95. The article is interesting as I wasn't expecting so many to be trading at premiums or close to NAV. I guess that's a sign of the times, people are chasing the 4%+ yield in a search for yield, and hence have driven the price up, eliminating usual discounts. Cheers Fletch  |
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Post by Fletchsmile on May 25, 2015 14:35:37 GMT 7
BTW This post linking to the Torygraph and MJPs about Amazon bigmango.boards.net/thread/1277/amazon-pay-taxwhich comes from the Guardian, reminds me of the big gap in Thai newspapers when it comes to writing quality articles on Finance. The Nation is terrible. There were a few other interesting links in the article to other pieces too, that wouldn't have found otherwise... |
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Post by rgs2001uk on May 25, 2015 14:54:28 GMT 7
I hold several and have held them for years, just keep reinvesting the dividend.
At the moment I am keeping my eyes open for whats going on at Alliance, seems the American predators are trying to get on board, if they do, my money will be pulled and invested in Baillie Gifford, Scottish Mortgage and Witan look favourites for the money to go.
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Post by Fletchsmile on May 25, 2015 15:40:12 GMT 7
Linked to the article Cheeeryble posted was this one I thought was also interesting. Also nice that it actually gives you investments to access the countries it refers to at the end, as often articles will say XYZ is undervalued then you have to scratch around and search how to access it It actually sums up my views on US and UK, very cautious on the former, and think UK could have more to run. At the "cheap end" I don't fancy touching Greek and Portugal it mentions. Russia on the other hand 4 cheapest compared to all time peak, does appeal. I like the Neptune fund it mentions to access Russia. Also another good fund, which AYG pointed out is JP Morgan Russia (JRS:LN). Falls just short of making it on the list of investment trusts paying over 4%, but has a very respectable 3.87% div yield, so links the two themes of yield and cheap countries nicely. High risk though. ================================================================================== Countries with cheap stock markets (and how to buy them)
This chart identifies cheap stock markets - we explain why they offer big discounts and how to back themInvestors who suffer from acrophobia - the fear of heights - face a dilemma. Over the past couple of years some of the world's largest stock markets have had a great run of form. Many have broken through their previous record highs, with Britain's FTSE 100 index the latest to reach uncharted territory. Naturally, some investors are wary about buying into a stock market that is trading at an all-time high, fearing that a fall could be around the corner. They may prefer to look at the markets that are well below their previous peaks in the hope that they will have their turn to shine in the coming years. Our graphic shows which countries' stock markets are at or near their record levels, and which seem cheap, expensive or fairly valued according to one of the most respected measures of valuation, the "Cape" ratio, explained below. Attachment DeletedWhy certain stock markets are at record highs As the chart shows, there are seven countries in addition to Britain whose markets are at all-time highs, most notably Germany, the United States and India. According to Russ Mould, of AJ Bell Youinvest, the fund shop, there is an old stock market saying that you can have cheap share prices or good news but not both at the same time.... contd.... www.telegraph.co.uk/finance/personalfinance/investing/11453209/Isa-fund-bargain-Countries-with-cheap-stock-markets-and-how-to-buy-them.html |
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AyG
Crazy Mango Extraordinaire
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Post by AyG on May 25, 2015 16:06:32 GMT 7
Investments trusts seem to have become less fashionable over the years, as unit trusts and ETFs have become more fashionable. In addition to being able to borrow and leverage, their "close ended" structure, compared to "open-ended" for ETFs and unit trusts, investment trusts can have some useful advantages. I'm not sure that ITs have become less fashionable - at least over the last couple of years. Following the shake up in the way that financial advisors are remunerated, ITs are now on a par with UTs. In the past financial advisors clearly had an interest in recommending UTs to receive the kickback commission. Those days are now pretty much gone. One problem with ITs (at least from the point of view of a Financial Advisor) is that the market cap is typically much smaller than a similar UT, making it difficult to include ITs in model portfolios which are bought for a large number of clients. Even with my modest level of investment I occasionally have liquidity problems buying/selling ITs. On the subject of closed ended structure, the key benefits are, as I see it (a) no need for the IT to hold significant amounts of cash to meet calls for redemption (I hate holding cash which isn't actually working for me), and (b) the investment manager doesn't need to sell investments at what may be an inopportune time to meet calls for redemption. I see the ability to leverage and the discount to NAV more as irritations than pluses. Fortunately, ITs are increasingly managing their discount to NAV and eschewing leverage. As for the original linked article, it's woefully simplistic. Any share that has a high yield has so for a reason. Looking at Black Rock World Mining (BRWM), which I happen to have owned for a few years now. I'm currently sitting on an almost 25% capital loss, and looking at an annualised 5 year return of -9.0%. JP Morgan Global Emerging Markets (which I also hold) isn't quite as disastrous, but has a 5 year annualised return of 3.8%. |
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Post by Fletchsmile on May 26, 2015 13:56:34 GMT 7
Yes investment trusts have had a bit of a revival in recent years. When you look at assets under management (AUM) though unit trusts and now ETFs still dwarf ITs.
I was thinking more in terms of history, and how unit trusts and then ETFs have become much more popular products. UK ITs like F&C go back to the 1800's. Unit trusts like M&G in UK were much later in 1930's. Sometime around 30 or so years ago +/- unit trusts really took off and left ITs standing. Then around 20 years ago ETFs arrived and took even more market share off ITs.
ITs are very useful in some circumstances, just nowhere near as popular these days as they used to be - maybe people just got used to the mass market product hype
People used to compare a unit trust to its similar investment trust by the same management house. If the IT was significantly at a discount they would switch from the unit trust to the IT, and vice versa. Then ITs just seemed to give way to the simplicity and sheer volume of UTs.
One of the things that would put me off many of the ITs listed in the article, is many are now trading at premiums. So when the market eventually crashes, people will lose twice: 1) in terms of asset values 2) supply and demand when no-one wants them, and a discount appears, selling at less than fair value. (By the same token in a bull market you get a double gain as the discount narrows or a premium comes). That people are now paying premiums worries me a bit.
Interesting article though for discussion.
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Post by Fletchsmile on May 26, 2015 14:03:04 GMT 7
BTW Saw that Neil Woodford had launched a new investment trust, Woodford Patient Capital Trust (WPCT). Didn't invest at start up. Will follow it though
When he switched to his own company I gave it a few months then switched from his old company (Invesco) Perpetual income unit trust to his new Woodford income unit trust. Even in that few months he outperformed, but I wasn't sure how it would go so waited a bit to see. Missed out on an extra few %, but thought better safe than sorry. Now he's back as one of my largest UT holdings in UK.
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Post by cheeryble on May 26, 2015 23:35:56 GMT 7
There's some real stuff to digest in both your answers thanks and I've been a bit overcooked on other affairs.
Found the chart thingy showing the state of various countries markets enlightening.
Funnily enough I was walking through a mall the other day and my favourite bank manager recognised me BKK bank had a ton of staff, mostly older, doing all sort of investment stuff.
The funny bit was she mentioned a healthcare fund which may of course be a hedge against health costs......though naturally one may be better buying the underlying in this case.
Then you've got the problem of the huge rise in value which i've seen with at least the RAM group.
May be best to wait for the event-driven pullback which will one day undoubtedly come.
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Post by Fletchsmile on May 27, 2015 13:25:42 GMT 7
On the health stocks you were thinking of Cheeryble, the other thing that struck me recently as a risk was possible government intervention in pricing of private hospitals. With the recent complaints and articles in newspapers about some of them overcharging for prescriptions etc, there's always a risk they could pass some legislation, which would hit profits and valuations
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Post by Fletchsmile on May 31, 2015 21:36:45 GMT 7
Article below touches on some of the basics of investment trusts vs unit trusts ================================================ Funds vs. investment trusts: Not an open and shut case Richard Troue | 29 May 2015 www.hl.co.uk/news/articles/funds-vs.-investment-trusts-not-an-open-and-shut-case Funds vs. investment trusts: Not an open and shut case Investors frequently debate the relative merits of unit trusts and open-ended funds versus investment trusts. The reality is both have different features, advantages and drawbacks. Which type of investment is best will ultimately depend on an individual's circumstances - including their objectives and attitude to risk. One man we believe is particularly well-placed to comment is Alex Wright. He manages both the open-ended Fidelity Special Situations Fund (which features on our Wealth 150) as well as the Fidelity Special Values plc investment trust. Both are managed using a contrarian approach where the manager seeks out-of-favour companies undergoing positive change, which is not being appreciated by other investors. We recently asked him to explain the key differences between the two funds. Size matters Fidelity Special Values plc tends to have a higher weighting in smaller and medium-sized companies. Its closed-ended structure, added to its smaller size, allows him to build larger positions in higher-risk smaller companies. Alex Wright also has the flexibility to use 'gearing' in the investment trust. This involves borrowing extra money to invest, which can amplify the portfolio's returns. However, it is worth bearing in mind that gearing increases risk as both the potential upside and downside are greater. Gearing currently stands at 20%. Premiums & discounts The unit price of the Fidelity Special Situations Fund reflects the value of the underlying investments. In contrast, the investment trust's share price is determined by supply and demand. A lack of demand or negative sentiment can cause the price of an investment trust to trade at a discount to its net asset value (NAV). A 10% discount effectively means you can buy £1 of assets for 90p, though if you are selling and the discount remains at 10% you will only receive 90p for £1 of assets. At the time of writing, the Fidelity Special Values investment trust shares trade at a discount to NAV of approximately 6.2%, slightly below the 12-month average. Current investment themes In terms of the two funds' underlying investments and themes there is a considerable overlap. Presently, Alex Wright sees opportunities among financial companies where many stocks are 'very cheap and unloved despite clear signs of improving business fundamentals.' For example, HSBC is one of the top holdings in both funds. Alex Wright believes investors have been put off by the company's exposure to Asia and feels companies with Asian and emerging markets exposure have tended to be shunned by investors in recent years, in favour of developed market-focused businesses. However, he believes HSBC is one of the more conservatively managed banks and, as a global business, it should benefit from global growth over the longer term. Being a contrarian investor, he has tended to avoid consumer goods businesses; the industry has performed well in recent years meaning many companies now trade on high valuations. Alex Wright can also take some 'short' positions in both funds meaning he has the ability to profit from share price falls, although he will lose if it does rise. Seadrill is an example of a previously-held short position initiated in early 2014. The highly-indebted company was overvalued in the manager's view and the combination of weak cash generation and a poor balance sheet meant its dividend was unsustainable. Alex Wright was proved correct and the company cancelled its dividend thus causing the share price to fall in value. Our verdict We like Alex Wright's disciplined investment approach and believe it is equally applicable to his open-ended fund and his investment trust. Both funds have the flexibility to invest in higher-risk smaller companies and use techniques such as shorting in order to maximise returns. However, the gearing and higher concentration of smaller companies in the investment trust means it is likely to be more volatile than its open-ended cousin |
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